Shri Anandbhai J. Maldhari, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-4(3), RAJKOT-GUJARAT

ITA 440/RJT/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0044 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 23-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Benefit of exemption

Judgement Text

ITA NO . 440 /RJT/2015 ASSESSMENT YEAR: 20 0 9 - 10 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E COURT AT AHMEDABAD] [ CORAM: PRAMOD KUMAR AM AND MAHAVIR PRASAD JM ] I.T.A. NO. 440 /RJT/201 5 ASSESSMENT Y EAR: 20 0 9 - 10 ANANDBHAI J. MALDHARI .... APPELLANT C/O. D.R . ADHIA, OM SHRI PADMALAYA , BESIDE TRIKAMRAIJI HAWELI, OPP. HOTEL IMPERIAL PALACE, 16, JAG NATH PLOT, DR. YAGNIC ROAD, RAJKOT. [PAN: A CJPM 6819 N ] VS. INCOME TAX OFFICER WARD - 4 ( 3 ), RAJKOT. . . RESPONDENT APPEARANCES BY: WRITTEN SUB MISSION, FOR THE APPELLANT USHA N. SHROTE , FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 01.12 .2016 DATE OF PRONOUNCING THE ORDER : 21 .12. 2016 O R D E R PER PRAMOD KUMAR: 1. THIS APPEAL, FILED BY THE ASSESSEE, IS DIRECTED AGAINST THE ORDER DA TED 25 TH AUGUST, 2015 PASSED BY THE LEARNED CIT(A) FOR THE ASSESSMENT YEAR 2009 - 10. 2. GRIEVANCE OF THE ASSESSEE, IN SHORT, IS THAT THE LEARNED CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OF DEDUCTION U/S 10(10C) OF THE INCOME TAX ACT, 1961 FOR AN AMOUNT OF RS.5,00,000/ - . ITA NO . 440 /RJT/2015 ASSESSMENT YEAR: 20 0 9 - 10 PAGE 2 OF 5 3. THE ASSESSEE IS A FORMER EMPLOYEE OF RAJKOT DISTRICT CO - OPERATIVE BANK LIMITED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS TAKEN VOLUNTARY RETIREMENT FROM THE B ANK, UNDER IT S VRS S C HEME, AND CLAIMED EXEMPTION U/S.10(10C) TO THE EXTENT OF RS.5,00,000/ - . HE, HOWEVER, DISALLOWED THE SAME ON THE GROUND THAT THERE WAS NOTHING TO SHOW THAT CONDITIONS UNDER RULE 2BA WERE SATISFIED AND THAT, IN ANY EVENT, EMPLOYER ITSELF HAD NOT ALLOWED THE DEDUCTION IN COMPUTATION ON FORM 16A. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BUT WITHOUT ANY SUCCESS. NOT SATISFIED, THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS , PERUSED THE MATERIAL ON RECORD AND DULY C ONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION 5. WE FIND THAT THE ISSUE IN APPEAL IS SQUARELY COVERED, IN FAVOUR OF THE ASSESSEE, BY A DECISION OF THIS T RIBUNAL, IN THE CA S E OF PANDYA VINODCHANDRA B HOGILAL VS. ITO [(2010 ) 13 3 TTJ (AHD) 253)] WHERE IT IS INTER ALIA OBSERVED THAT : - WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE DISTINCTION CITED BY THE LEARNED CIT(A) IS NOT SOUND AND DOES NOT STAND TO REASON. THE ONLY BASIS FOR NOT A LLOWING THE CLAIM HAS BEEN THAT SCHEME FOR VRS IS NOT IN ACCORDANCE WITH R. 2BA. HOWEVER, IT HAS NOT BEEN POINTED OUT HOW THE EMPLOYER HAS NOT FRAMED THE SCHEME IN ACCORDANCE WITH R. 2BA. EARLIER TILL 2002 SCHEMES WERE REQUIRED TO BE APPROVED BY THE CHIEF CIT BUT THEREAFTER SUCH REQUIREMENT HAS BEEN DISPENSED WITH AND, THEREFORE, IT IS ONLY FOR THE EMPLOYER TO FRAME THE SCHEME FOR VRS OR FOR EARLIER EXIT OPTION. IF AO HAD ANY DOUBT ABOUT THE SCHEME HE COULD HAVE ENQUIRED FROM THE EMPLOYER. SO FAR AS THE ASS ESSEE EMPLOYEE IS CONCERNED, HE CANNOT BE PENALIZED AND TAX WILL BE LEVIED ON HIM ON THE ASSUMPTION THAT THE SCHEME FRAMED BY EMPLOYER IS NOT IN ACCORDANCE WITH R. 2BA. IN ANY CASE, THE JUDGMENT OF THIRD MEMBER IN DY. CIT VS. KRISHNA GOPAL SAHA (SUPRA) IS CLEARLY APPLICABLE AND WE DO NOT FIND ANY REASON TO TAKE A DIFFERENT VIEW. FOR ITA NO . 440 /RJT/2015 ASSESSMENT YEAR: 20 0 9 - 10 PAGE 3 OF 5 THE SAKE OF CONVENIENCE WE REFER TO FOLLOWING PARA FROM THE THIRD MEMBER JUDGMENT IN KRISHNA GOPAL SAHA S CASE (SUPRA) AS UNDER : 5. AT THE TIME OF HEARING BEFORE ME, NONE APP EARED ON BEHALF OF THE ASSESSEE - RESPONDENT. I HAVE, THEREFORE, HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL PLACED BEFORE ME. I FIND THAT THE ISSUE HAS BEEN CONSIDERED BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SAIL D SP VR EMPLOYEES ASSOCIATION 1998 VS. UNION OF INDIA (SUPRA) IN WHICH THEIR LORDSHIPS HELD AS UNDER : SEC. 10(10C) OF THE IT ACT, 1961, USES THE EXPRESSION ANY AMOUNT RECEIVED BY AN EMPLOYEE... AT THE TIME OF HIS VOLUNTARY RETIREMENT IN ACCORDANCE WITH A NY SCHEME OR SCHEMES OF VOLUNTARY RETIREMENT ....IF A PLAIN LITERAL INTERPRETATION OF STATUTORY PROVISION PRODUCED A MANIFESTLY ABSURD AND UNJUST RESULT, WHICH THE LEGISLATURE COULD NOT HAVE INTENDED, THE COURT IS SUPPOSED TO MODIFY THE LANGUAGE USED BY TH E LEGISLATURE EVEN TO DO SOME VIOLENCE TO IT SO AS TO ACHIEVE THE OBVIOUS INTENTION OF THE LEGISLATURE AND PRODUCE A RATIONAL CONSTRUCTION. AN EXPRESSION USED IN THE STATUTE IS NOT ALWAYS TO BE INTERPRETED LITERALLY OR GRAMMATICALLY. SOMETIMES IT HAS TO BE INTERPRETED HAVING REGARD TO THE CONTEXT IN WHICH THE EXPRESSION IS USED AND HAVING REGARD TO THE OBJECT AND PURPOSE FOR WHICH THE SAME IS ENACTED. SEC. 10(10C) WAS INSERTED IN ORDER TO MAKE VOLUNTARY RETIREMENT ATTRACTIVE SO AS TO REDUCE HUMAN COMPLEMENT S FOR SECURING ECONOMIC VIABILITY OF CERTAIN COMPANIES. THIS OBJECT WAS ELABORATED BY VARIOUS DEPARTMENTAL CIRCULARS AND EXPLANATORY STATEMENTS ISSUED FROM TIME TO TIME. SIMILARLY, R. 2BA OF THE IT RULES, 1962, WHICH WAS INSERTED BY IT (SIXTEENTH AMENDMENT ) RULES, 1962, WAS AMENDED FROM TIME TO TIME. ALL THESE GO TO SHOW THAT THIS WAS INTENDED TO MAKE VOLUNTARY RETIREMENT MORE ATTRACTIVE AND BENEFICIAL TO THE EMPLOYEE OPTING FOR VOLUNTARY RETIREMENT. THEREFORE, THIS HAS TO BE INTERPRETED IN A MANNER BENEFIC IAL TO THE OPTEE FOR VOLUNTARY RETIREMENT, IF THERE IS ANY AMBIGUITY............. SUMS PAID ON VOLUNTARY RETIREMENT TO THE EXTENT OF RUPEES FIVE LAKHS ARE EXEMPTED FROM BEING CHARGED TO TAX BY REASON OF S. 10(10C). EVEN IF THE PAYMENT IS STRETCHED OVER A PERIOD OF YEARS, THE SAME WOULD NOT BECOME CHARGEABLE TO TAX IN ANY SUBSEQUENT ASSESSMENT YEAR. FROM THE ABOVE IT IS EVIDENT THAT THEIR LORDSHIPS OF THE JURISDICTIONAL HIGH COURT HELD THAT AN EMPLOYEE, WHO TAKES VOLUNTARY RETIREMENT, IS ENTITLED TO DEDUC TION UNDER S. 10(10C) EVEN IF THE PAYMENT IS STRETCHED OVER A PERIOD OF YEARS. THEY HAVE ALSO HELD THAT PROVISION OF S. 10(10C) SHOULD BE INTERPRETED IN A MANNER BENEFICIAL TO THE OPTEE FOR VOLUNTARY RETIREMENT. IT MAY BE POINTED OUT THAT IN THE ABOVE - MENT IONED CASE, THE EMPLOYER I.E. SAIL WAS OF THE OPINION THAT THE EMPLOYEES WERE NOT ENTITLED TO EXEMPTION UNDER S. 10(10C) AND ACCORDINGLY, SAIL HAD BEEN DEDUCTING TAX AT SOURCE ON THE AMOUNT PAID UNDER THEIR VOLUNTARY RETIREMENT SCHEME. THE FACTS ARE SIMILA R IN THE ASSESSEE S CASE, BECAUSE IN THE CASE OF THE ASSESSEE ALSO, THE EMPLOYER BELIEVING THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER S. 10(10C) HAS DEDUCTED TAX AT SOURCE ON THE AMOUNT PAID ON VOLUNTARY RETIREMENT. THE FACTS BEING IDENTICAL, THE ABOVE DECISION OF HON BLE JURISDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE CASE UNDER APPEAL BEFORE THE TRIBUNAL. ITA NO . 440 /RJT/2015 ASSESSMENT YEAR: 20 0 9 - 10 PAGE 4 OF 5 6. SIMILARLY, HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. NAGESH DEVIDAS KULKARNI (SUPRA) HELD AS UNDER : THE ASSESSEE IS ENTITLED TO THE EXEMPTION UNDER S. 10(10C) OF THE ACT AND ALSO REBATE UNDER S. 89 OF THE ACT IN RESPECT OF THE AMOUNT RECEIVED IN EXCESS OF RS. 5,00,000 ON ACCOUNT OF VOLUNTARY RETIREMENT. THUS THEIR LORDSHIPS HAVE HELD THAT THE ASSESSEE, WHO OPTS FOR VOLUNTARY RETIREMENT, IS NOT ONLY ENTITLED TO EXEMPTION UNDER S. 10(10C) BUT ALSO REBATE UNDER S. 89 OF THE IT ACT. SIMILAR VIEW IS TAKEN BY THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. P. SURENDRA PRABHU (SUPRA) WHEREIN THEIR LORDSHIPS HELD AS UNDER : THAT THE ASSESSEE, EMPLOYEE OF THE RESPONDENT BANK WAS NOT ONLY ENTITLED TO THE BENEFIT OF EXEMPTION UNDER S. 10(10C) OF THE ACT TO THE EXTENT PRESCRIBED IN THE PROVISION ITSELF BUT FOR ANY AMOUNT OVER AND ABOVE THE PRESCRIBED LIMIT; UNDER THE A FORESAID PROVISION, THE ASSESSEE WAS ALSO ENTITLED TO RELIEF UNDER S. 89(1) OF THE ACT R/W R. 21A. 7. FROM THE ABOVE IT IS EVIDENT THAT WHILE THE LEARNED AM RELIED UPON THE DECISION OF HON BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. M. CHELLADURAI & OR S. (2008) 5 DTR (MAD) 201 , HE HAS NOT TAKEN INTO ACCOUNT THE DECISIONS OF OTHER HIGH COURTS INCLUDING THE JURISDICTIONAL HIGH COURT. THE HON BLE JURISDICTIONAL HIGH COURT UNDER THE IDENTICAL FACTS HELD THE ASSESSEE, I.E., THE RETIRED EMPLOYEE, TO BE ENTITL ED TO DEDUCTION UNDER S. 10(10C). SIMILAR VIEW IS TAKEN BY HON BLE BOMBAY AS WELL AS KARNATAKA HIGH COURTS. THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IS BINDING UPON US AND MOREOVER IF TWO VIEWS ARE POSSIBLE, WHILE INTERPRETING THE PROVISION, A VIE W WHICH IS FAVOURABLE TO THE ASSESSEE HAS TO BE ADOPTED. HON BLE JURISDICTIONAL HIGH COURT IN THE ABOVE - REFERRED CASE OF SAIL DSP VR EMPLOYEES ASSOCIATION 1998 VS. UNION OF INDIA (SUPRA) HAS ALSO HELD THAT THE PROVISIONS OF S. 10(10C) ARE TO BE INTERPRETED LIBERALLY IN A MANNER WHICH IS BENEFICIAL TO RETIRED EMPLOYEES IN VIEW OF THE ABOVE. I RESPECTFULLY FOLLOWING THE DECISIONS OF HON BLE JURISDICTIONAL HIGH COURT, BOMBAY HIGH COURT AND KARNATAKA HIGH COURT AGREE WITH THE LEARNED JM AND HOLD THAT THE ASSESS EE IS ENTITLED TO EXEMPTION UNDER S. 10(10C) TO THE EXTENT OF RS. 5 LAKHS.' RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, WE ALLOW THE CLAIM OF ASSESSEE. 6. IN VIEW OF THE ABOVE LEGAL POSITION, WE UPHOLD THE GRIEVANCE OF THE ASS ESSEE AND D IRECT THE ASSESSING O FFICER TO DELETE THE IMPUGNED DISALLOWANCE OF RS.5,00,000/ - . ITA NO . 440 /RJT/2015 ASSESSMENT YEAR: 20 0 9 - 10 PAGE 5 OF 5 7. IN THE RESULT, THE APPEAL IS ALLOWE D IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF DECEMBER , 2016. SD/ - SD/ - MAHAVIR PRASAD PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD : 21 ST DECEMBER , 2016 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUA RD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT